Neco Model Questions Vol1 2017 Economics Question 45

Practice objective / multiple choice question 45 from the 2017 Neco Model Questions Vol1 Economics examination.

Neco Model Questions Vol1 2017 Economics Objective / Multiple Choice Hard Difficulty
Question 45 NECO_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • objective

The government imposes a per‑tonne tax of ₦30 on wheat. Before the tax, wheat supply is \(Q_s = 2P - 40\) and demand is \(Q_d = 180 - P\), where \(Q\) is in thousand tonnes and \(P\) is the price in naira per tonne. (a) Find the equilibrium price and quantity before the tax. (b) After the tax, determine the price received by farmers, the price paid by consumers, and the new equilibrium quantity. (c) Compute the total tax revenue collected. (d) Estimate the dead‑weight loss caused by the tax.

Answer Options

A. Before tax: P=₦80.00, Q=110.00k t; After tax: farmers receive ₦70.00, consumers pay ₦100.00, Q=85.00k t; Tax revenue ≈ ₦2.5 million; Dead‑weight loss ≈ ₦0.5 million
B. Before tax: P=₦70.00, Q=120.00k t; After tax: farmers receive ₦60.00, consumers pay ₦90.00, Q=80.00k t; Tax revenue ≈ ₦2.0 million; Dead‑weight loss ≈ ₦0.4 million
C. Before tax: P=₦75.00, Q=100.00k t; After tax: farmers receive ₦65.00, consumers pay ₦95.00, Q=90.00k t; Tax revenue ≈ ₦3.0 million; Dead‑weight loss ≈ ₦0.2 million
Correct Answer D. Before tax: P=₦73.33, Q=106.67k t; After tax: farmers receive ₦63.33, consumers pay ₦93.33, Q=86.67k t; Tax revenue ≈ ₦2.6 million; Dead‑weight loss ≈ ₦0.3 million.
Correct Answer
D
Correct Option:
Before tax: P=₦73.33, Q=106.67k t; After tax: farmers receive ₦63.33, consumers pay ₦93.33, Q=86.67k t; Tax revenue ≈ ₦2.6 million; Dead‑weight loss ≈ ₦0.3 million.

About This Question

This is Neco Model Questions Vol1 2017 Economics Question 45. It is one of the objective questions from the 2017 Neco Model Questions Vol1 Economics examination.

Difficulty level: Hard .

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